The Brunner Test is a tool created by bankruptcy judges to measure whether student loans are causing a debtor undue or ordinary hardship. Judges needed it because lawmakers never defined what “undue hardship” meant, even though they changed the bankruptcy code several times over the years.
The test comes from a 1987 case in which a woman named Marie Brunner tried to get rid of her student loans less than a year after earning a master’s degree. To discourage people from rushing to bankruptcy after graduating, the New York judge laid out a three-prong test that grants a discharge if the answer to each question is “yes”:
Have you made a good-faith effort to repay the loans?
Are you unable to maintain a minimal standard of living while making the payments?
Is your financial situation likely to persist?
Soon, other judges found the three-part tool useful and used it in their cases, referring to it as the Brunner Test. You can click here to read Brunner v. New York State Higher Education Services Corp., (2d Cir. 1987).
Although popular, the test is not without criticism. Bankruptcy judges have recently begun arguing it’s “unintentionally harsh” and not “meant for adults still on the hook for student-loan debt years after college,” according to an investigative report by the Wall Street Journal. For example, in a concurring opinion for the bankruptcy appellate panel decision in the United States Court of Appeals for the Ninth Circuit, judge Jim D. Pappas wrote, “the analysis required by Brunner to determine the existence of an undue hardship is too narrow, no longer reflects reality, and should be revised…”.
Despite the attacks, the Brunner Test remains the law of the land in many bankruptcy courts across America.
Learn More: Can You File Bankruptcy on Private Student Loans?